Jan

30

When I was a Yale undergrad, I took a class called "Lessons of Japan." The course was a mixture of economics, policy and sociology, and the goal was to explain why Japan was so successful; how US industry should model itself after the Japanese; how the Commerce Department should be like MITI; and how the interconnected corporate holdings of Japanese companies ("Zaibatsu") were a key to lasting profitability and success. (There was also a mention of morning calisthenics for assembly line workers.)

It looks like Yale has updated its curriculum! From an interview with Steve Roach, former Morgan Stanley economist/permabear and now lecturer at Yale:

ROACH: … one of the great courses I'm teaching at Yale is called "The Lessons of Japan." You spend five weeks studying what happened in Japan and developing metrics to calibrate the excesses pre-bubble, the mistakes made post-bubble, and then we look at that template relative to other countries in the developed and developing world and there's a lot of striking similarities. Especially insofar as the U.S. and Europe let these bubbles and policy blunders distort the real side of their economy. It would be one thing if these were just financial or market-driven excesses. But they're not.

Read the full interview here. (By the way, I got an A in my class. It was a gut course.)

Dan Grossman writes:

One of the great mysteries to me in recent years is why Japan is not doing better, its economy not growing faster.

I used to do quite a bit of work in Japan, and I was always impressed by the intelligence, hard work and cooperative dedication of Japanese businesspeople. Yes, maybe they screwed up somewhat from a government economic standpoint, but why should that be so important compared to all skills and expertise of major Japanese companies, and their position close to China where they can both take advantage of cheap Chinese manufacturing and serve as the gateway for many business interactions between China and the Western world.

Nor am I impressed by the conventional explanation that a part of the problem is Japan's failure to allow immigration, that its static population will doom it to know low growth and an aging population. I don't see that massive legal and illegal Hispanic immigration is so economically so advantageous for the US. And there are great advantages to Japan in maintaining its homogeneity and its happy, fairly classless interactions between all levels in Japanese society.

Actually I have heard from Japanese friends and visitors that life in Japan these days is quite good. The population is prosperous and happy, with far fewer problems than in the US and Western Europe.

I guess my puzzlement is why Japan has not been a better investment, why its stock market has not been performing better.